12/03/2008 @ 12:00AM

HTC Bets On Design

Imagine a cellphone that’s cooler, more elegant or simply better designed than the iPhone.

Or at least try. That’s the nightmare job for every mobile phone maker around the world. To compete, handset makers are collaborating with outside designers, pumping money into R&D and even buying design firms.

HTC plans to announce Wednesday that it has acquired One & Co., a San Francisco-based industrial design company that has worked with
Microsoft
,
Sony
and
Nike
.

The 10-year-old firm, which specializes in “creating meaningful experiences” between people and products, will help the Taiwanese handset maker produce attention-grabbing devices, asserts HTC Chief Innovation Officer Horace Luke. Both companies declined to disclose the financial terms of the acquisition.

The deal points up the primary role design occupies as cellphones morph into our most personal gadgets. “Design is the reason why you love or hate something,” says Luke. “As mobile devices get more integrated into people’s lives, design will matter more than ever.”

HTC has had a standout year. Within the past seven months, it released the G1, the first phone to run
Google’s
mobile operating system Android; the Touch Diamond, a gem of a phone that is anticipated to sell 3 million units this year; and the Touch Pro, a handset stocked by
AT&T
,
Sprint
and
Verizon
Wireless that combines a touchscreen with a full keyboard.

It also dedicated the past two years to shoring up its design resources. The team currently includes a Taiwanese research firm and design team and some West Coast software designers.

Lately, though, HTC has come under assault by other handset makers targeting the same market of touchscreen smart phones. It also believes it needs more design expertise to meet its lofty goal of becoming a top five handset vendor in the next few years. Luke hopes that buying One & Co.–which has shaped the look and feel of some of HTC’s higher-end phones such as the Touch Diamond, Touch Pro and S740–can bolster HTC’s prospects.

As
Apple
has handily demonstrated, products that forge emotional connections with people sell well.

Luke sees several other benefits. Though small, the 17-person firm will bring a more global perspective to HTC’s mostly Taiwanese design team, says Luke. Scott Croyle, a One & Co. principal, says the firm employs designers from Europe, Japan, Hong Kong, Canada and the U.S.

Luke also expects One & Co. will bring HTC unorthodox ideas inspired by other projects. (The firm will keep its name, San Francisco location and current clients, though it will stop working with competing mobile and wireless firms.)

One & Co.’s job designing snowboard boots for equipment company K2 Sports could lead to new materials for HTC’s mobile devices, suggests Luke. “We have 10 years of expertise in hardware and engineering,” he says. “One & Co. adds flavor, art and magic to our work.”

The firm is expected to weigh in on everything from a phone’s hardware to its software, packaging and Web site design. It may even shape future Android devices. Croyle says the firm, which was not part of the G1 design process, will work on all HTC products going forward, including possible Android launches.

One & Co. will also have a say in HTC’s marketing and communications work–a critical area as HTC continues to distance itself from its contract manufacturing roots and refashion itself as a consumer goods company. (See “Seeking Out Android.”)

Expect to see sleek designs like the Touch Diamond. One & Co. influenced HTC to make the phone as compact as possible by banning excess plastic parts, says Luke. “They taught us to look at a handset the way BMW looks at a chassis,” he says. “The suggestion prompted an entirely different way of constructing the phone,”

The Touch Diamond was the first time HTC stopped talking about technical specifications and started obsessing about aesthetics, says Croyle. (See “HTC’s Diamond Breakout.”)

On the Touch Pro, One & Co. again called for a smaller, tighter, user-friendly design. “HTC’s legacy was designing business tools,” says Croyle. “You have to figure out what people will notice. When you pull the phone out of your pocket, you want your friends to ask about it.”

Luke says the two companies have spent the past month and a half working intensively on new products. When they hit shelves in 2009, consumers will be able to decide whether more design is better.